Little has changed in supply chain management theory since Forrester’s groundbreaking study over 50 years ago showing the correlation between a company’s success and the interrelationships between company functions and its network of suppliers and customers. Forrester identified a system consisting of five key dynamic “flows.” Information, materials, money, manpower, and capital equipment determine the basic tendencies towards growth or decline of a company.
Recently we posted a blog that touched on the respective benefits of local versus global supply. We think it’s worth reiterating the benefits of each (separately and in combination) to an organization. As Supply Technologies sources many products from both global and local suppliers (billions of parts from more than 7,500 suppliers), we believe we have the expertise to know when a global supplier makes sense for a customer’s supply chain fulfillment, when a local supplier is more practical or beneficial, and when and how to blend the two for optimum supply chain performance and results.
There are a number of very real threats to every company’s supply chain, like a natural disaster, a major facility accident, and even an intentional subversive act. The likelihood of any of these types of incidents occurring increases for companies with extended global supply chains, short product lifecycles, and unpredictable markets. Today, the number and types of threats that can undermine a supply chain are greater than ever, and the reason redundancy has taken on even more importance in supply chain management.
Of course, there’s no way to prevent disruptive or catastrophic events from occurring, but a company can take smart steps to prepare for and deal with them – and, in the process, ensure business continuity. When it comes to the supply chain, the best way to ensure your company’s ability to quickly get back up and running is to institute redundancies in the supply chain.
Before jumping into implementing a custom VMI program that will undoubtedly result in improvements to your current supply chain management, there’s another important opportunity to improve efficiencies that’s often overlooked. That’s to conduct an engineering and design review of the products that drive the depth, breadth, and complexity of a company’s parts requirements. This is a rigorous examination of the key design elements of products, looking for practical ways to reduce parts inventory SKUs and potentially simplify the manufacture and assembly of these same products.
Working closely with our customers’ engineers, we search for parts redundancies that can be eliminated with simple design or drawings modifications. Manufacturers with exhaustive product offerings who haven’t gone through a disciplined parts consolidation process will almost always have a surprising number of redundancies uncovered, for no other reason than that in most new product design and engineering efforts, designers are not limited to current parts inventory.